Skidelsky’s Latest Keynesian Fantasies

In his current  Bloomberg piece ( link below). Keynes’s biographer Robert Skidelsky tells us that the famous economist’s “notion of satiety” has  been buried by the “Darwinian capitalism” unleashed by Thatcher and Reagan in the 1980′s,  with its “ideological faith in the market system” and glorification of “untrammeled self-interest” as expressed through the “profit motive.” He further  tells us  that Keynes and other sensible earlier economists believed that “people would, and should as rational agents, work less and enjoy life more.”

A reader on Bloomberg states that ” Skidelsky inhabits the mental world of his hero, Mr Keynes.” But does he? His three volume biography seemed reasonably balanced and accurate. Keynes’s many contradictions were noted. But in recent years, Skidelsky has presented Keynes more as the person he wishes he had been, not the real person.

Consider Keynes’s own life for a moment. Did he ever stop or even decelerate  his furious pursuit of ever greater personal  wealth? No. Did he ever stop working so hard? No. Even when disabled by a serious heart condition, he refused to stop working himself to exhaustion  and may have contributed to his early death by doing so.

Was it a case of ” do as I say, not as I do” on Keynes part? Not entirely. He did think that society could and should reach a point of satiety in consumer goods, but he did not think society should then start loafing. He envisioned that hard work and the accompanying wealth would be directed to support  the arts and what he considered the higher pursuits  of life.

Would Keynes have agreed with Skidelsky that the ” main challenge [now is] to ensure that the fruits of the new abundance [ are] democratically distributed?”  It is doubtful. Keynes said  that in the class war, he would be on the side of the educated and cultured bourgeoisie. As a thorough-going elitist, he was  often impatient with “democracy” but  in any case was  thinking of it in political, not fanciful economic terms.  And of course any such discussion is puerile because wealth is not something that we pick up on the beach and share among ourselves. It has to be created through hard work and investment and insight. Most  socialist schemes of redistribution just destroy it for everyone.

Skidelsky is also against what he, like many others, calls “trickle down.” This would be more persuasive if “trickle down” were not  oxymoronic. When asset owners invest their assets in a business, the money flows immediately to workers and contractors, or indirectly to workers or contractors in other industries by buying or renting buildings and equipment. This money may or may not flow back eventually to the investor, but if it does, and better still if there is a profit, the asset owner is paid last. The party who is receiving payment last cannot logically be “trickling down” his or her wealth.

One point at least Skidelsky gets part right. He says that the “system of the past 30 years… has been retained for the benefit of a predatory plutocracy that creams off the riches.” This is indeed going on. But this is not a plutocracy of honest businessmen and women. It is a crony capitalist  plutocracy linking  politicians, bureaucrats, public union leaders,  trial lawyers, Wall Street, and many other government dominated and directed industries. It is  a crony capitalism that has been created and defended  by the very economic policy ideas which Skidelsky espouses.

http://www.bloomberg.com/news/2012-06-07/too-much-faith-in-markets-denies-us-the-good-life.html